RocoMamas, Hussar Grill give Spur a much-needed boost

Spur Corporation [JSE:SUR] announced on Thursday that it has increased its headline earnings by 10.2% to R165m in the year to June 2019

Group revenue increased by 5.9% to R945m and profit before income tax grew by 13.9%. The total dividend was increased by 10.6% to R1.36 per share.

The company described South African trading conditions during this period as challenging. Franchised restaurant sales in SA grew by 6.2% as the group's middle-income customer base came under increasing pressure in the slowing economic climate, according to Group CEO Pierre van Tonder.

At the same time, its international business was impacted by weak economic conditions and high operating costs in Australia.

Spur Steak Ranches increased restaurant sales by 5.4%. It has over 1.2 million active Spur Family Card members.

The Hussar Grill, which caters for higher income customers, grew restaurant sales by 13.4%.

RocoMamas, according to the group one of the fastest growing brands in SA's casual dining sector, grew restaurant sales 7.5% and John Dory's increased restaurant sales by 4.6%.

Panarottis and Casa Bella grew restaurant sales by 0.9%. The Panarottis chain continues to be impacted by aggressive discounting in the pizza takeaway market, according to the group.

Therefore, according to Van Tonder, the group has "embraced the call-and-collect" and delivery models. It is experiencing strong growth across all brands from third party delivery services such as Mr D Food and Uber Eats.

Across the group, its restaurant base increased to 620. There was a net opening of 39 new outlets.

The Nikos Coalgrill Greek chain was acquired in August 2018, comprised six restaurants.

The group opened its first restaurants in India and Cyprus - both RocoMamas outlets - while The Hussar Grill opened its first restaurant in Saudi Arabia.

"In this constrained spending environment, we continue to focus on enhancing the margins of our franchisees to ensure a more sustainable franchise business," Van Tonder said in a statement.

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International restaurant sales increased by 12.3%, benefiting from the opening of a record 20 restaurants during the year.

"Trading in Africa, Mauritius and the Middle East remains strong, while trading in certain African countries including Namibia, Kenya and Lesotho was slower," said Van Tonder.

"Trading conditions in Australia and New Zealand continue to be challenging, with sales declining by 15.9% following the closure of three restaurants. As a result of the high franchisee operating costs and financial losses we are re-evaluating our operations in these countries."

More than 20 new restaurants are planned for the new financial year, including at least 11 in South Africa and ten international restaurants. International expansion will focus primarily on Africa and the Middle East, with three RocoMamas outlets in Saudi Arabia and new restaurants in Kenya, Nigeria, Mauritius, Zambia and Zimbabwe.

Van Tonder said the group expects trading conditions to remain difficult in the short to medium term against the background of low economic growth, the weak labour market, fragile consumer confidence and continued pressure on household budgets.

"In this environment, we will maintain our focus on tight cost management, excellent product quality and supporting the profitability of franchisees," he concluded.

By late morning Spur Corporation shares were trading up 1.14% at R22.25 per share.